The debate between freehold and leasehold properties is one that has persisted for decades, and with good reason. In Singapore, where land is a finite resource, there’s a widely-held belief that freehold properties will become increasingly rare, and with rarity comes desirability. And, as we all know, with desirability often comes price appreciation. This logical rationale has stood the test of time and continues to be a key factor in the decisions of buyers and investors.
But here’s the million-dollar question: Which one is better?
Well, like most things in real estate, the answer isn’t as straightforward as it might seem. It really boils down to one key factor: YOU.
The Factor That Matters Most: You
The choice between freehold and leasehold doesn’t hinge solely on price trends or market speculation—it’s fundamentally about your personal goals, preferences, and long-term plans.
To guide you in making the right decision, let’s dive into some critical questions that will help clarify your priorities.
Does the Entry Price Make Sense for your plan?
This is something I can’t stress enough, and it’s a point I’ve raised in previous posts: Your entry price matters.
If you’re considering a property in a specific vicinity, ask yourself:
- Does the price align with what similar properties are selling for in the same area?
- Are you getting good value for the price, considering the location and the property’s potential for appreciation?
While a freehold property may come with a higher upfront cost, you’re not just paying for the land—you’re buying long-term value, potential capital appreciation, and stability in a market where supply is tight. But, you need to be realistic. If the entry price of a freehold property in a particular location is substantially higher than comparable leasehold properties, will it still make sense for your budget and long-term goals?
On the flip side, a leasehold property could offer more affordable entry points, but that doesn’t necessarily mean it’s a poor choice. In fact, in the right circumstances, a leasehold property can be a more financially sensible decision if you’re focused on short-to-mid-term goals or if the area you’re considering is primed for development.
Ultimately, your budget and how much you’re willing to pay for long-term ownership should drive your decision.
What Are Your Needs?
This is where it gets personal.
What do you need from your property? Are you looking for something that fits your lifestyle now, or are you planning for future generations?
Legacy Planning
If you’re considering legacy planning for your kids or even your grandkids, then a freehold property might be a better fit. Freehold ownership allows you to pass down the property forever, whereas leasehold properties are bound by a timeline. As the lease term shortens, you might find fewer potential buyers as the property nears its expiration, which could impact its resale value.
A freehold property offers the ability to build generational wealth, creating a long-lasting asset for future generations. If you’re investing with a long-term view, and you’re thinking of leaving something behind for your children or grandchildren, the value of permanent land ownership cannot be underestimated.
Immediate Needs and Flexibility
But what if you’re not thinking that far ahead? What if you need something more suited to your immediate needs? If you’re someone who plans to stay in the property for 10–20 years or is focused on lifestyle priorities (like proximity to schools, work, or public transport), a leasehold property could meet your needs more efficiently.
Leasehold properties, particularly those with longer remaining lease terms, can still offer good value for money, and they might be perfectly suited to your requirements if you’re in it for the mid-term. Plus, leasehold properties generally come at a lower entry price, which means you can free up funds for other investments or lifestyle choices.
Timeline you working with
Are you planning on holding the property for decades for your loved one’s future, or are you thinking more short-term?
For long-term investors, freehold properties are typically seen as a safer bet. They are more likely to appreciate over time, especially as they become rarer. If you’re willing to pay a premium for this long-term stability, then freehold ownership makes sense.
However, if your goal is to purchase a property with plans to upgrade or sell in 5 to 10 years, then a leasehold property might provide more flexibility. Leasehold properties may depreciate as the lease term winds down, but they may also offer more opportunities for short-term gains in certain areas.
So, Which Is Better?
The answer is simple, yet complex: It depends on you.
- Freehold is an excellent choice if you value long-term ownership, legacy planning, and the potential for price appreciation driven by scarcity.
- Leasehold may be better if you’re focused on affordability, short-term investment goals, or the flexibility to upgrade in a decade.
Ready to Make the Right Choice for Your Future?
Whether you’re leaning towards a freehold or leasehold property, or even feeling a bit lost, making an informed decision is key. Don’t leave it to chance—let’s discuss your options and see how we can work together to ensure you’re on the right path to securing a space that suits your future. Feel free to hit me up or simply fill out the contact form—it’s up to you!
